Sage Critical Update Issue

NEW: Vat Treatment of Unpaid Purchase Invoices

Budget 2013 – Vat Treatment of Unpaid Purchase Invoices

Disallowance of Input VAT on Unpaid Invoices

Budget 2013Following on from the October Budget, the Finance Act 2013 was enacted in December and the following Vat change applies.

Businesses that do not pay their suppliers within 6 months will be required to repay the VAT previously claimed.
Where a person deducts VAT in a taxable period but has not within 6 months of the end of that taxable period, paid the supplier for the goods or services, then an adjustment will be required in the VAT return. The amount of VAT deductible for the period will be reduced by the amount of the VAT relating to the unpaid consideration.
A re-adjustment is provided for in the event of subsequent payment or part payment for the goods or services.

This applies in respect of VAT reclaimed from 1st January 2014. You can make adjustments to the Vat Returns in Sage 50 to account for this. If you have a query on this new rule and how it applies to your Sage 50 accounting package, please contact James Doyle on (071) 9146815.